Dangerous disruption

The agitation by pilots against a memorandum of understanding signed between PIA and Turkish Airlines is absolutely unwarranted and blatantly uncalled for. It is a primary responsibility of any corporate management to explore avenues for revenue enhancement and undertake cost-cutting measures to maximise return to shareholders who are the real and legitimate owners of the company.
The Chief Executive Officer of PIA is generally an appointee of the country's constitutional chief executive. He derives his strength from his relationship with the appointing authority instead of the board, although its directors are also governmental appointees. The protesters see a violation of rules by arguing that the signed MoU was directly sent to the Ministry of Defence by bypassing the board of directors. Let us dispense with the formality. President Asif Zardari has himself received a briefing from the MD PIA on the subject. He has publicly shown his approval as he feels that under the current circumstances, the arrangement makes a sound business sense. We must allow the board of directors to examine the proposal as most major airlines of the world have similar cost-cutting and revenue-enhancement arrangements.
PIA's problems are multifarious. They include: an ageing fleet comprising old fuel-guzzling planes beset with the highest manpower to plane ratio at a time when fuel cost is only increasing. Over time, PIA has become more of a regional carrier. Adding to its woes are three much stronger airlines (Emirates, Etihad and Qatar), which are fiercely competing for Pakistani passengers. Foreign nationals constitute a very small percentage of PIA's total customer base. Flush with oil and gas revenues, the three Gulf carriers have brand-new planes with arguably best connectivity options that discerning passengers prefer. Further, the three carriers are set to add hundreds of new Boeing and Airbus planes to their respective fleets in coming years. As a consequence, pressure on PIA will grow and continue to mount.
PIA flew to over 65 destinations until a couple of years ago. Now it operates on 40 routes basically on account of an ageing and a dwindling fleet. With government's fiscal problems getting worse with every passing day; there are hardly any chance of acceptance of its business plan, which envisages, among other things, purchase of new planes. Both previous Finance Minister Shaukat Tarin and present incumbent Dr Hafeez Sheikh have resisted giving more money to PIA on grounds that they first would like to see a viable business plan before committing any new investment.
Unfortunately, however, the management of PIA is caught between a rock and a hard place. On one hand, anti-business practices are now back at the heart of politics in an environment where taxpayers are in no mood to give anything more to tax eaters. Fixing public sector units should be the top agenda item as they are eating away as much as Rs 250 to Rs 300 billion annually. At the same time, we must not subject them to unnecessary criticism as their health is vital to the health of society as a whole because of their valuable contribution to economic growth. The government must therefore allow all the PSEs the freedom to manage, experiment, expand and close down the bad ones. The Federal Cabinet needs to push ahead the Public Sector Reforms Package given by Finance Minister Dr Hafeez Sheikh.
The choice is simple: push ahead with reforms. They must be redesigned with focus on productivity and improving services. That will create more jobs in the long-term. Or else give in again and cut more services and raise more taxes. Pilots, flight engineers, air traffic staff or other support and operational members of the airline look at the issues facing their company with a narrow vision and with a vested interest, which is quite logical and plausible. They need to realise that management has a broader vision.
And, the political leadership has to take a futuristic and realistic view before deciding on PIA-Turkish Airlines collaboration. Let us not jump the gun and add to the existing chaos. Any notion of an underhand deal needs to be shunned. After all, both PIA and Turkish Airlines are government-owned and-managed entities. For Pakistani passengers, the choice to go via Dubai or Abu Dhabi or Doha or Istanbul will still remain available with them. Yes, the flying allowance of pilots and discounted fares for PIA staff and families could come under a new scrutiny owing to airline's formidable financial constraints.